Australian Property Market Getting A Christmas Cold
News Posted On: 08 December 2012
While the recovery in the American market continues to go from strength to strength (for now at least) other markets which have until now proven resilient to the crisis, are now beginning to suffer.
Australia has been very strong during the crisis. It has been a constant shock to many owing to the fact that the UN ranked it one of the most overvalued markets in the world before the crisis, but for all the times commentators cried overheating, Australia continued to grow strongly as demand refused to wane.
But now the indications are that its run is finally coming to an end, with falling sales in Sydney and across the country. The latest report to show this trend is from Australia Property Monitors, showing a drastic drop in the auction clearance rate in Sydney.
The property auction clearance rate in Sydney plunged last weekend as many prospective home-buyers turned their attentions to buying Christmas gifts rather than property, marking the start of the traditional festive season slowdown. The report shows that the Sydney rate fell by more than 5% in a week - from 59.2% to 54%. The fall was less pronounced in Melbourne, with Real Estate Institute of Victoria figures showing a 1% fall from 61% to 60%. Market experts believe that the decline in sales puts home-buyers in an extremely strong position, as vendors try to secure a sale over the next few weeks, before the festive season slowdown really kicks in.
APM senior economist Dr Andrew Wilson told the press: “A similar thing [slowdown] happened last year where the market did run out of steam towards the end of spring.”
He added: “Definitely the top end of the market has gone to sleep over the last few weeks.” The situation won't be helped by an increase in supply, especially as this Saturday is set to be the biggest of the year for Sydney in terms of property auctions, with 618 planned in the city. In Melbourne even more properties will be up for sale at the 927 auctions planned there. Some experts are calling for an interest rate cut to help stimulate demand, but Dr Wilson doubts even an interest rate cut this week will have much influence on the market this late in the year.
"If they were going to drop them, they should have done them in November," he said.
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Written by Les Calvert
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